AIG Consumer Lender Cuts 900 Jobs as Losses Mount
American General Finance Corp. also closed 145 branches, the Evansville, Indiana-based lender said today in its quarterly report to regulators. The cuts represent about 11 percent of the 7,900 employees American General had as of Dec. 31, according to a separate regulatory filing. The company has about 1,400 branches according to its Web site.
The consumer unit scaled back lending and securitized receivables after losing access to usual funding sources. American General recorded a $1.3 billion net loss last year tied to subprime mortgages and was cut to the lowest investment grade by Moody’s Investors Service last month.
“We may implement further measures to preserve our liquidity and capital,” including securitizing loans and shutting more branches, American General said in the filing. “The exact nature and magnitude of any additional measures will be driven by prevailing market conditions.”
The second-quarter loss widened to $227.2 million from $31.8 million in the year earlier period, the lender said today. Revenue fell by about a third. Lauren Day, a spokeswoman for New York-based AIG, didn’t return a call seeking comment.
American General cut 380 jobs and closed 178 locations in the fourth quarter, including all branch offices in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island, the lender said in its annual report.
“Our liquidity concerns, dependency on AIG, results of our operations and the uncertainty regarding the availability of support from AIG have impacted our credit ratings,” the lender said today. Moody’s cut American General to Baa3 from Baa2 on “constraints in the unsecured debt markets,” the ratings firm said in a July 31 statement.
American General securitized $1.9 billion of real estate loans last month, receiving $967.3 million before expenses. The lender said in July it would receive as much as $975 million selling mortgage-backed certificates to Credit Suisse Group AG.
With AIG’s intentions to further support American General, “we believe that we will have adequate liquidity to finance and operate our businesses and repay our obligations for at least the next 12 months,” the lender said in the filing.
AIG posted its first profit in seven quarters last week. American General is among the assets AIG is trying to sell as it raises cash to repay the U.S. after taking a government bailout valued at $182 billion. The insurer has announced more than $9 billion in asset sales.